A BMW waiting room built for show

A BMW dealership in Brampton, Ont., has created a premium lounge and membership experience that is generating loyalty and referral business from a subset of high-income customers, say brand executives. 

While all BMW dealerships are required to create a lounge-style space for their premium customers, Policaro BMW, about 50 kilometres west of downtown Toronto, exceeded those requirements with its Bavaria Lounge, said Kevin Marcotte, national manager of i, M and special vehicles for BMW Canada. 

“Their Bavaria Lounge ... was part of their vision when they began planning Policaro BMW,” Marcotte said. “It is a space where high-luxury customers can enjoy the ultimate premium ownership experience.” 

The lounge, which was integrated into the second floor of Policaro BMW when it was built in 2016, features granite countertops, contemporary furnishings, a bar, a golf simulator and connected flat-screen TVs. The space was designed by Oakville, Ont.-based architectural designer Ferris Rafauli, who designed the Sher Club — the exclusive, members-only space in Toronto’s Air Canada Centre that was opened by Toronto rapper Drake. 

EXCLUSIVE ACCESS 

That star-power connection drew customers to the dealership as soon as it opened, said Dealer Principal Francesco Policaro. 

“With [Ferris’s] name behind it, being a new store, we got a lot of premium customers calling in requiring vehicles, directly from Ferris’s clientele,” Policaro told Automotive News Canada. 

“To have a high-end designer behind it [provided] business-to-business marketing.” 

Lounge access at all BMW locations is restricted to customers purchasing the brand’s most high-end products: the 6-, 7and 8-series cars; M performance vehicles; X6 and X7 crossovers; and the i8 plug-in hybrid coupe. The lounge reflects expectations of people shopping in these premium segments, Policaro said. 

“Prior to opening the dealership, I did a lot of research in regards to BMW clientele because this was our [group’s] first BMW dealership. One of the things I learned was that it’s almost like there’s two different classes of customers. A 3-series customer is very different than a 7-series customer. 

“The idea was to provide more of a premium service to these elite customers.” 

LOUNGE ... AND MORE 

Customers receive access to the lounge plus valet home or office pickup for service appointments, basic detailing, courtesy vehicles equivalent to their own and invitations to dealership-hosted events such as track days or wine tastings. 

An optional upgrade to an Experience Plus membership, costing $795 per year, adds catered meal service at the lounge, premium detailing, a 72-hour priority valet service guarantee and winter tire storage. 

Brynn Winegard, a Toronto-based retail and marketing expert, said premium spaces such as the Bavaria Lounge are key to attracting high-end customers to brick-andmortar stores. 

“What we talk about [as] best practice is creating what is called ‘being spaces,’” Winegard said. “Holt Renfrew has done this, Nordstrom does this, Microsoft does this, Apple does this to some extent. What it is, is a circumstance in their retail environment where their consumers can just go and be. The idea is effectively that that would drive foot traffic.” 

LUXURY LETHARGIC 

Luxury sales in Canada are under pressure. According to the Automotive News Data Center, BMW brand sales were down 6.1 per cent in 2019 compared with 2018, while the overall luxury segment fell 4.5 per cent. Across the board, new-vehicle sales declined 3.6 per cent in 2019.

“Sales are down more so than the total industry because there aren’t as many truck and SUVs models for luxury buyers to choose from,” said Robert Karwel, J.D. Power’s senior manager of Automotive Practice in Canada. 

“All of those trucks and SUVs provided some additional buoyancy to the mainstream market, which the luxury industry did not have as much of, or in the case of pickup trucks none at all. ... Luxury would have fared a bit better if it had a few more utility-body-style nameplates out there in ’19.” 

Inviting customers into a space without the pressure of making a sale is crucial to remaining competitive in today’s evolving retail business model, Winegard said. 

“In the automotive category, we’ve seen it’s plagued with that used-car salesman bad [reputation],” she said. “The amount of time spent in a retail space directly increases ... purchase intent. 

“It’s not enough anymore in retail, and especially in bricks-and-mortar retail, to sell things. You have to have a reason for people to show up. 

“What brands are hoping for, especially in the automotive category, is something we call consumer tribalization....You go to see and be seen and to interact with your friends so that you create a BMW tribe. ... You’re borrowing from the brand’s identity in order to build your own identity.” 

PLACE TO WAIT, OR CELEBRATE 

Although Policaro declined to disclose the upfront cost of building the lounge, he said its maintenance costs involve the salary of one full-time staff member — “she is responsible to make sure that [customers] get the most optimal and premium experience,” he said — plus an estimated monthly cost of $500 for consumables. 

While some customers use the lounge as a waiting area if they choose to bring their vehicle in for service, others have asked to hold meetings or social events in the space, Policaro said. The dealership also uses it as a space for executing high-value purchase agreements and for hosting dinners. 

Policaro cited one customer who purchased an i8 after going through a life-changing experience. 

“He decided after he almost passed away that he wanted to buy this i8. It was a special moment for him. 

“We invited him to the lounge, and he invited 30 of his closest friends and family. We did a breakfast for him wit Champagne and orange juice and a cake. So, it was a different kind of experience, and then we did the unveiling during the delivery.” 

The lounge, Policaro said, is generalizing loyalty as well as repeat and referral business. 

“When you provide an optimal experience, they come back, and they refer lot of people, too. We’ve got a lot of great responses from customers and referral from it. It seems to be working quite well.”